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Globalstar, Inc. announced
financial and operating results for the fourth quarter
and year ended December 31, 2019.

Dave Kagan, Chief Executive
Officer of Globalstar, commented, "In November, we
successfully refinanced our capital structure when we
executed an amendment of our existing senior secured
credit facility and raised a new second lien term loan
facility led by Thermo and Echostar. This transaction
significantly improved our balance sheet, provided us
with extended runway and maintained the favorable
interest rates of our existing credit facility. Our
capital structure now positions us well to execute our
plan for value creation from our spectrum and satellite
assets."

Mr. Kagan continued, "As our
2019 financial performance reflects, we continue to
capitalize on the IoT growth opportunities in front of
us, with a 26% increase in Commercial IoT service
revenue over 2018 as both subscriber count and average
pricing increased. We have focused our product
development efforts around Commercial IoT devices,
particularly modules that can be integrated into the
products of our partners, which should broaden our
current reach. These modules offer enhanced
functionality in a very small form factor and
competitive price point, which we think will be
attractive to those needing data reporting capabilities
in remote or harsh environments. Outside of Commercial
IoT, 2019 was a transitional year in many respects. We
believe we are back on the right track with the updates
that we made to our consumer products based on the
positive trajectory of SPOT subscriber additions
following the release of SPOT X ® with Bluetooth®
technology late in the third quarter. We also have
received positive customer responses to our most
recently launched Duplex product, Sat-Fi2® RAS. In the
last 12 months, we have made many critical decisions,
from how best to improve our capital structure to
determining appropriate consumer service pricing. All of
these decisions are founded on positioning Globalstar
for growth, and we have the team, products and network
advantages to be successful.”

Jay Monroe, Executive
Chairman of Globalstar, added, "Since our last business
update call, we have made progress on terrestrial
spectrum by cultivating the asset, adding to our roster
of potential ecosystem partners and advancing our
international regulatory efforts. After the initial 3GPP
approval in late 2018, Jarvinian Advisors and the
spectrum team have continued to make additional progress
at 3GPP with respect to 5G and carrier aggregation
specifications which will further align the capabilities
of the band with what is required from the equipment
ecosystem and potential partners. We expect both the 5G
variant of Band 53 and carrier aggregation to be
completed by the 3rd quarter 2020. It’s a complicated
time in the wireless industry with the variables of
C-band, CBRS and the recently approved T-Mobile and
Sprint merger; however, our S-band provides a clear and
understandable resource in an industry experiencing so
much uncertainty. We are eager to conclude our 3GPP
efforts so that our spectrum can be a part of new
network builds in 5G. While this effort is underway, we
are actively working on potential private LTE
deployments that can serve as the proving grounds for
our commercial efforts with the potential to produce
meaningful revenue."

Mr. Monroe continued, “As
evidenced by Thermo’s additional investment in the new
second lien, open market stock purchases and conversion
of our 2009 loan into stock at a price well above the
current market price, my confidence in the value of our
spectrum and satellite business remains high. Our
spectrum strategy has been consistent, and we will
continue to increase the marketability of the spectrum
through both international regulatory successes and 3GPP
standardization. We are driving the ecosystem to have
more infrastructure and industrial devices working on
Band 53 and are actively pursuing a variety of
deployments with partners like Nokia, Airspan and
Airwavz. We are working through product certifications
for the first deployments with these partners to meet
their customer needs across industries including
utilities, transportation systems, ports, in-building
wholesale networks, in-building and on-campus private
LTE networks and fixed and mobile wireless services,
among others. While I am eager to see that first dollar
come in from use of our spectrum, I am encouraged by the
progress we have made and confident in our strategy. We
are closer than ever to realizing our long-held belief
that 5G networks will require greater density thus
leading to increased small cell deployments where our
spectrum is well-suited. We are also closer than ever to
realizing the potential for a single company to have an
internationally harmonized spectrum band. Our regulatory
efforts in major countries continue to ramp up. However,
from a broader investment perspective, Thermo does not
deploy capital in Globalstar only for the spectrum
potential. I believe significant untapped value exists
in the satellite network. The continued shift towards
IoT is the right move not only from a competitive
perspective but also because it is a large and growing
market where the longer-term value of acquiring a
customer should be very attractive due to low churn. I
applaud the team’s efforts on the new IoT module. The
initial feedback has been very constructive."

Mr. Monroe continued, "The
Company also continues to expand its consumer efforts
and expects to soon begin cross selling products in the
auto market, an opportunity which started as an IoT
application but is now expanding to utilize other
Globalstar services. Globalstar’s satellite network
represents a large in-space resource and getting more
and more IoT services to go over that network will drive
free cash flow. Finally, the Company is committed to
conveying the most fulsome information to our investor
base and doing so in a cadence that matches fundamental
developments rather than following a strict quarterly
schedule. Going forward we believe that our investors
would be best informed of significant business
developments through comprehensive press releases, such
as this earnings release, and periodic business update
calls and investor events when appropriate.”

FOURTH QUARTER FINANCIAL
REVIEW

Revenue

Total revenue for the fourth
quarter of 2019 was essentially flat from the fourth
quarter of 2018 due to an increase in subscriber
equipment sales offset by a decrease in service revenue.

Service revenue decreased
$0.8 million, or 3%, in the fourth quarter of 2019
compared to the fourth quarter of 2018. This decrease
was primarily driven by fewer Duplex subscribers as
churn was greater than gross additions during the last
twelve months. Although churn was generally consistent
with average historical levels, gross additions were
lower than the previous twelve-month period due to fewer
equipment sales. We have various initiatives underway to
drive higher Duplex activations. We released an improved
Sat-Fi2® device during September 2019 and a derivative
product, the Sat-Fi2® Remote Antenna Station, during
October 2019 in response to customer demand and to
expand the use cases for the Sat-Fi2® device. Further
development efforts are underway to launch additional
derivatives of this device. SPOT service revenue was
down slightly from the fourth quarter of 2018. This
decrease was due particularly to a 5% decline in average
subscribers, even though the majority of the churn was
involuntary as we deactivated nearly 10,000
non-revenue-generating subscribers in Latin America.
Excluding this involuntary churn, SPOT subscribers at
the end of 2019 would have been in line with the end of
2018. Offsetting the decline in Duplex service revenue
was a 22% increase in Commercial IoT service revenue.
This increase was driven by growth in our average
Commercial IoT subscriber base of 12% and higher ARPU of
9%. The higher subscriber count resulted from Commercial
IoT equipment sales during the last twelve months,
primarily of our SmartOne family of products led by our
SmartOne SolarTM which launched in 2018. The SmartOne
SolarTM is a solar-powered IoT asset tracking device
(with ATEX and intrinsically safe certifications),
proving to be a cost-effective, low power and secure
monitoring solution for a variety of security
applications.

Subscriber equipment sales
revenue increased $0.7 million, or 14%, in the fourth
quarter of 2019 compared to the fourth quarter of 2018.
As previously mentioned, this growth was due almost
entirely to sales of Commercial IoT devices, including
particularly our SmartOne SolarTM device, which
contributed $1.0 million to the increase. Revenue
generated from Duplex and SPOT equipment sales were flat
quarter over quarter.

Loss from Operations

Loss from operations
decreased $1.4 million, or 7%, to $17.1 million in the
fourth quarter of 2019. This decrease was due primarily
to a decrease in operating expenses resulting from lower
MG&A expenses and cost of services, offset partially by
higher cost of subscriber equipment sales and asset
impairment charges of $1.5 million recorded during 2019.
The $3.5 million decrease in MG&A expenses was due
primarily to the timing of costs incurred (and the
recovery of those costs) to defend the securities claim
that was settled during the fourth quarter of 2018.
These costs did not recur in the fourth quarter of 2019;
additionally, we received an insurance recovery during
the fourth quarter of 2019 of $1.7 million, which
further reduced expenses. The asset impairment charges
were due primarily to a $1.1 million write-down in the
carrying value of our former gateway site in Nicaragua,
which was classified as held for sale as of December 31,
2019.

Net Loss

Net loss was $37.7 million
for the fourth quarter of 2019 compared to $96.5 million
for the fourth quarter of 2018. This decrease resulted
primarily from the change in non-cash derivative
valuation adjustments during the respective quarters,
which contributed $67.6 million to the decrease in net
loss. This fluctuation resulted primarily from changes
in certain valuation inputs, including stock price,
stock price volatility and the remaining estimated term
of the instruments. Partially offsetting this decrease
was higher interest expense due primarily to lower
capitalized interest, higher average interest rates in
place during 2019 and higher amortization of deferred
financing costs. In connection with the refinancing in
November 2019, which included a partial paydown of our
senior credit facility, we wrote off a proportional
amount of the remaining deferred financing costs
associated with that debt.

Adjusted EBITDA

Adjusted EBITDA for the
quarter ended December 31, 2019 increased slightly to
$9.8 million as compared to the prior year's fourth
quarter. This increase was due to higher revenue of $0.2
million offset partially by a $0.1 million increase in
operating expenses (both excluding EBITDA adjustments
for non-cash or non-recurring items). The increase in
operating expenses during the fourth quarter of 2019
resulted primarily from higher cost of subscriber
equipment sales in line with the higher volume of
hardware sales, offset partially by a decrease in cost
of services due in part to lower ground network support
costs.

ANNUAL FINANCIAL REVIEW

Revenue

During the twelve months
ended December 31, 2019, total revenue increased $1.6
million to $131.7 million from $130.1 million in 2018.
This increase was impacted by an out-of-period
adjustment of $3.9 million during the third quarter of
2019 related to a change in the calculation of the
estimated impact from the initial adoption of ASC 606.
Excluding this adjustment, total revenue decreased $2.3
million from 2018. This decrease was due primarily to a
$1.6 million decrease in service revenue, driven by
fewer Duplex subscribers and lower revenue recognized
from government contracts. Also contributing to the
decrease in service revenue was a 3% decline in average
SPOT subscribers; approximately 10,000 subscribers were
involuntarily deactivated during 2019 as they were
non-revenue-generating. Excluding this involuntary
churn, SPOT subscribers at the end of 2019 would have
been higher than at the end of 2018. These items were
offset by an increase in Duplex ARPU as well as
significant growth in our Commercial IoT business,
including subscribers, ARPU and hardware sales. Total
revenue generated from subscriber equipment sales
decreased $0.7 million, which resulted primarily from
lower volume and pricing of Duplex and SPOT units sold.

Loss from Operations

Loss from operations
increased $16.7 million, or 35%, during 2019 due to an
$18.3 million increase in operating expenses, offset
partially by a $1.6 million increase in total revenue.
The increase in operating expenses was due primarily to
the $20.5 million reversal of a contract termination
charge during 2018. An increase in depreciation as well
as asset impairment charges recorded during 2019 also
increased operating expenses. The increase in
depreciation expense was due to a full year of
depreciation of the second-generation ground
infrastructure assets placed into service during
mid-2018. Offsetting these increases was a decrease in
MG&A driven primarily by the costs incurred to support
our efforts associated with the proposed merger and
associated litigation during 2018, which did not recur
at the same level in 2019.

Net Income (Loss)

Net income was $15.3 million
for 2019 compared to net loss of $6.5 million for 2018.
This fluctuation is due primarily to non-cash items,
including a $64.0 million increase in derivative gains,
offset partially by an $18.9 million increase in net
interest expense and an $18.2 million increase in
operating expenses (as previously discussed). The
anticipated conversion of the Thermo loan agreement
during the first quarter of 2020 was the primary driver
of the higher derivative gain during 2019 as the value
to the holder of the conversion feature within the loan
agreement is lower. The increase in interest expense was
driven primarily by lower capitalized interest of $6.6
million (which increases interest expense) and an
increase in interest costs of $12.5 million due to a
higher average cost of debt during 2019 compared to the
prior year as well as the write-off of a portion of the
deferred financing costs related to our senior credit
facility following the partial paydown of that debt in
November 2019.

Adjusted EBITDA

Adjusted EBITDA decreased by
7% to $37.8 million in 2019 due primarily to a $1.9
million decrease in total revenue (for reasons
previously discussed) and a $0.9 million increase in
operating expenses (both excluding EBITDA adjustments
for non-cash or non-recurring items). The increase in
operating expenses during 2019 resulted primarily from
$1.2 million in costs related to tariffs on nearly all
of our Chinese-manufactured products sold since July
2018. The recognition of these costs followed an
unfavorable ruling received from U.S. Customs in October
2019. We are pursuing options to mitigate the impact of
these tariffs, including negotiating lower costs from
our primary manufacturer and suppliers.